VOX: Dodd-Frank turns 5 today — it’s Obama’s most underappreciated achievement

Career College Central Summary:

  • Five years ago today, Barack Obama signed one of the most important but least understood bills of his presidency: the Dodd-Frank financial regulation overhaul, which represents his main response to the enormous financial crisis that arrived immediately before his election. The law has many detractors and few fans. Pundits argue that it either suffocates the biggest banks with red tape or did nothing to change anything; that it is either a complete takeover of the financial sector or a series of things with no overall logic whatsoever.
  • This is all mistaken. Dodd-Frank was part of an international, clear plan to reform the most obvious financial sector flaws that contributed to the crisis. Results, though often stalled, are overall positive and substantial — and in each case there's a clear path forward building on the bill.
  • Dodd-Frank has three core pillars

    • To understand American financial reform, it's crucial to understand the broad principles that took hold internationally after the financial crisis. In September 2009, the G20 group of the world's 20 largest economies met in Pittsburgh to discuss financial reform priorities. They released a statement on how they would "adopt a set of policies, regulations and reforms to meet the needs of the 21st century global economy." The international context matters because financial flows in the modern day are highly global, and any given country's approach needs to reflect a broader logic…
  • The CFPB's key achievements

    • As a brand new agency, the CFBP launched one year after Dodd-Frank was signed, and in the past four years it's accomplished a lot. The bureau works through two primary channels. First, it fines businesses for bad practices, creating a real penalty for breaking the law. Second, it's started to shed light into the previously dark areas of the credit, debt, and financial systems.
    • Through 2015, there's been $10.1 billion in relief to consumers, much of it stemming from manipulative conduct in mortgage services or deceptive practices in the credit card industry.
    • The CFPB launched an investigation into the for-profit college ITT and argued it "misled students by overstating their salaries and job prospects upon graduation." This action helped launch a series of important investigations into for-profit schools that has so far culminated in the collapse of Corinthian Colleges.

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